On Google Nexus 4: Why the Stock Android Phone wasn't so much in stock. ^Featured

This article may sound as if coming from a bitter fanboy who did not get his desired new toys for last Christmas. Well, it may be true. A little. However, the circumstances around Google Nexus 4 certainly helped to trigger certain ideas in my head.

Google Nexus 4 by LG does not need introduction to gadget enthusiasts. The phone was introduced in mid-November of last year (2012) created some ground-shaking in the Mobile world, promising pure, stock Android, top of the line specifications for half the price of what other phones cost. This all sounds a perfect product, the one coming down straight from geeky heaven. There is one slight bummer, however. It has been sold out ever since.

Google gets a lot of things right, as was the case with the Nexus 4. Product design? Check. Phone Specifications? Check. Price? Double-Check. Market Entry timing? Check again. Christmas was definitely a perfect time? Phone supply? ‘.... not so much. Few of those, who managed to check their basket out with a Nexus 4 in it haven’t received their shipment until late January, almost two months later. For the rest, Google (at least in UK), offered an ‘unreserved apology’, pointing their finger at LG as root of the evil. LG, on the other hand, argues that they fulfilled all orders, only that there weren’t that many by Google to start it. Whoever the fault is, both sound more as PR statements to maintain their respective reputation, neither of which helps the customers themselves.

The aim of this article, however, is not to put blame on either of the companies, rather, analyse where the supply chain stumbled that made Nexus 4 a scarcity.

Available for everybody, but not meant to.

The Nexus 4, similar to its bigger and older brother, Nexus 7, is equipped with a stock version of Android Jelly Bean, offering a ‘clean’, unskinned version of Android. A reference device, perhaps, unofficially targeted mainly at developers so that they can expand the Android app database. And here is where I see a problem.

Google, a pretty well-known company by now, creates a reference device, aims it at developers (which, compared to the size of the market, isn’t such a huge number) plus one or two of the average customers, and prices it at a ridiculously low price, which ‘accidentally’ triggers wallets of hundreds of thousands of bargain-diggers. And here is where I see a problem. Google might have seen stock Android and rather impressive specifications as the main point of differentiation, but customers saw only one thing- a well-built device for a more than attractive price. A phone as good as the Galaxy S3 or the iPhone 5, for only a half of both items' hefty price tag. Instead of the developers market, they have instead attracted the mass market, which most probably exceeded their predictions by multiple times, leading to them having no other option but to stop the sale in order to match production with demand.

To sum up, a big problem I see is that Google failed to understand the market well enough and did not make appropriatte forecasts. After all, neither the Nexus S nor the Galaxy Nexus experienced such high demand, although they entered the market with a much higher price tag.

Lesson not learnt?

Although the situtation and sales channels were different, Google faced prolonged stock outages with the Nexus 7 earlier in 2012 as well. Did they not learn from their mistake? I believe they did and they probably even increased the production numbers by many times. However, it has to be noted that the Android tablet market is still a growing marketplace and a demand for a high-spec, budget phone is more than likely to be much higher- the demand for Nexus 4 was probably multiple times higher than that for Nexus 7.

Another question to ask is that of Google's partnership with LG. Sure thing, LG helped to design a beautiful phone to look and hold, though if this is the first of many Google Phones to come that target the market in a similar way, Google may want to review the LG's mass production capability. I do not see Samsung or Sony agreeing to build a low-cost phone that would directly compete with their line of high-end smartphones. Maybe Nokia, in the future (being a Nokia fan, boy, I wish).

The last question I would like to ask is the nature of distribution channels. The Nexus 4 was available on Google's Play Store for a mere 279 pounds for the 16gb version, whereas retail stores and phone operators retailed it for 399 pounds, a vast sum more expensive, mainly due to LG going for increased margins and phone operators trying to push long-term contracts through. This in itself is understandable, but selling the product for a different price on Play Store effectively alienates Google's and LG's other customers (operators and phone sellers such as Carphonewarehouse), as well as creates further stress on Google's and LG's production maxed out production capacity.

Bright, but uncertain future?
Looking at the demand and the prolonged stock outage, it is not arguable that Google and LG have created an attractive device and that people would like to see more to come. The long wait and erratic supply have had a bad impact on reputation of both , though, and many have turned their attention and money away to different offerings. I do believe that the production and stock will eventually settle and that unhappy customers will forget.

Overall, in my opinion there is a rather deep-lying problem with the positioning and market segmentation of the product, leading to an imprecise forecast of sales. Google's 3 Nexii devices introduced in 2012, the 4, 7 and 10 all faced stock shortages, which prompts our team at the Lens to question their overall strategy. Of course we would love to be proved wrong, but that can only be seen in time when Google introduces their next device.